What are self-employed 'books' supposed to look like?

Question

I have been self employed for some time and do my tax return online. However, I've noticed that some banks and other organisations request your 'books' if you are self employed. Could anyone (in the UK) tell me what such books should look like exactly. Of course, I have a black book listing earnings and outgoings...but should it be more comprehensive than that? Other than keeping receipts and wage slips, and filling in my account online, is there some form of specific hard copy I should be keeping? Many thanks!

Answer 1

As others have stated most banks, etc. mean accounts when they say "books". They also often as for "audited" accounts when they really mean figures with an accountant's certificate. (The word audit has a specialised meaning which most bank managers fail to understand)

But the question of what books are acceptable is a good one. You are taxed on the profit made by the business which is the difference between the income earned and the expenditure incurred. So any record which allows you to get to these figures is acceptable.

The income earned is not the same as the money received, unless you always get paid on the day you do the job. Most people record the money received so there has to be a way of working out how much is owed to you at any given time. This can be as simple as marking the date of payment on your copy of your invoice to your customer. The income earned is then the money received plus the money owing (less any money that was owed at the beginning of the period).

Similarly with expenditure.

Also if you are registered for VAT then more detailed records may be needed.

Answer 2

I work for a building company that uses self employed sub-contractors. I do the book-keeping, deal with the tax/cis tax etc. If you are self employed, under the cis scheme you can have your tax deducted by the person who "employs" you. Tax is deducted at 30% until you are verified with the cis scheme, and then it drops to 20%. In your circumstances, the book-keeping side of things is easy. There are things that you can claim for and allow against your tax - but it's too complicated to write it all down here. If you let me have a contact email I will show you how to keep your paperwork straight, tell you about tax allowances, the cis scheme etc etc.

Answer 3

The answers from Ellis and Jeannette D are correct.
When banks ask for a copy of your "books" they mean a copy of the Profit and Loss Account for your business and possibly a Balance Sheet also if one has been prepared.
A Profit and Loss Account is basically what you have entered on Page SE2 of the self employment pages of your tax return.
A Balance Sheet is entered at page SE4 of your tax return.
Basically, what the bank want is a statemnt showing your Sales or Business Income, your Cost of Sales, your overheads and your remaining profit.
Hope this helps

Answer 4

Unfortunately too many banks etc. use the term "books" loosely. What they really want is a copy of the formal accounts that your accountant should produce at the end of each financial year and which forms the basis of your self assessment tax return.

Answer 5

HMRC now require that you maintain proper books and records. Failure to do so will result in a fine from them.
Books normally comprise a Bank Cash Book, Petty Cash Book, Credit card records etc. These are the prime records which are required to support any entries you make in your tax return.

Answer 6

I've found that when financial institutions say they are looking for your 'books' what they actually mean is a copy of your tax return, so although you've filed it online hopefully you've saved a copy.

Answer 7

lol

books .. yes, every financial transaction that has happened in the business in the relevant financial year:- They are usually kept in order by way of books .. similar to you have explained ..


sales day book, wages, vat control, paye, purchase day books, cash book, purchase order book, sales order books, work in progress (if manufacturing)


self assesing tax is a doddle, they even help you fill out your return .. for free!!! you should have the information you require with your self assesment forms & literature ...

Answer 8

I'm not sure what you mean by "wage slips" if you're self employed, but that sounds about right.

You should also keep invoices in respect of business purchases in case HM Revenue ask to see them for proof of deductabilty.

If you are or become VAT registered you will have to keep some extra records for that.